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Appeals Court Suspends Peugeot's Job-Cut Plan

PARIS — PSA Peugeot Citroën, the struggling French automaker, has been ordered by an appeals court to temporarily halt carrying out its plan to shed workers in France. But the company said the ruling would not affect its overhaul in the long run.

The Paris Court of Appeals partially overturned a September decision by a lower tribunal, agreeing with a union complaint that Peugeot had failed to adequately discuss its revamping plans with workers at Faurecia Intérieurs Industries, an auto parts maker in which it owns a majority stake.

The appeals court reached the decision Monday, but did not make it public until Tuesday.

The appeals court held that Faurecia — which is also seeking to cut jobs — must formally consult with its workers before Peugeot can begin putting its own plan into effect. Faurecia said Tuesday that it would begin the consultation process “without delay.”

A Peugeot spokesman, Pierre-Olivier Salmon, said the decision would have little practical effect on the company's plans because “we’re only in the negotiation phase now, anyway.” The appeals court left untouched the tribunal’s dismissal of the union’s request to overturn Peugeot’s restructuring plan.

Peugeot is battling to regain its footing in a European auto market that shrank by more than 8 percent last year. It is particularly vulnerable to the slump because it does not have a large presence in high-profit luxury vehicles and is dependent on the European market, including southern European countries that have been badly dented by the sovereign debt crisis.

The company said last year that it would close its plant in Aulnay-sous-Bois, near Paris, and was aiming to cut 8,000 jobs of the roughly 97,000 people it employs in France. Peugeot said it hoped to achieve the staff cuts mainly by offering early retirement and buyouts. It has also said it will not replace some other departing workers as it seeks to reduce its total French work force by around 11,200 jobs by mid-2014. Strikes and other industrial actions have become common, with union employees on Monday interrupting production at the Aulnay facility for a time.

The French company last year sold a 7 percent stake to General Motors, which has its own problems in Europe with its struggling Adam Opel unit. The two companies have formed a loose alliance to cooperate on vehicle projects and logistics.

Peugeot’s legal setback serves to illustrate the difficulty of streamlining operations in France, particularly in an industry that the government views as a strategic priority amid wide concerns for the country’s competitiveness. President François Hollande, a Socialist, has said Peugeot restructuring plan was “not acceptable.”

Monday’s ruling also shows how seriously courts here take companies’ legal obligations to workers. Earlier this month, a court threw out the overhaul plans of Le Crillon, a landmark luxury hotels in Paris, just months before it was to close for a two-year renovation. The hotel’s owner, the tribunal found, had failed to adequately consult with its 360 employees.